EMI 'trying to buy Madonna's record company'

EMI has begun talks with Time Warner about buying the US media giant's music business.

EMI says it has entered non-exclusive discussions about a "possible transaction" regarding the Warner Music Group's recorded music division.

The London-based music recording and publishing group says the discussions are at a very early stage, adding: "There is no assurance that they will result in an agreement acceptable to both parties."

The statement follows a newspaper report that EMI had offered $1.5bn (€1.3bn) for the music business. Any deal would require shareholder and regulatory approval. But if it goes ahead, it would create the world's second largest music group behind Universal.

Among star names at EMI are Robbie Williams, Norah Jones and Kylie Minogue, while Warner Music Group has Madonna, Red Hot Chili Peppers, Craig David and Missy Elliott.

EMI was prepared to pay one billion US dollars (£609 million) in cash and offer shares worth $500m (€430m), leaving Time Warner with about 25% of EMI, the Sunday Times said.

There were hopes of a deal being completed by the end of next month, the report said. The combination would create a company with a 2002 global market share of 23.9%, compared with 25.9% by Universal.

A similar tie-up between EMI and Time Warner fell foul of regulators in 2000, but the report speculated that the escalation of piracy and slump in music company profits could lead to a different outcome this time.

It follows the ending of an exclusivity agreement on talks between US-based Time Warner and Germany's Bertelsmann about creating a 50:50 joint venture.

Shares in EMI have almost doubled since hitting a low point of 80p earlier this year. The stock is still way below its value of 390p in 2002 as the impact of internet piracy continues to hit the music business.